Cigarette prices rise on Friday

May 14, 2009

JACKSON -- Mississippi''s cigarette tax increases to 68 cents a pack Friday, culminating a years-long battle to generate more state revenue and discourage people from smoking.

Republican Gov. Haley Barbour -- who vetoed previous cigarette tax-increase bills -- on Wednesday quietly signed into law the 50-cent hike the House and Senate approved last week. The old 18-cent-a-pack tax had been the same since 1985.

"This is truly an historic day for Mississippi," said Roy Mitchell, head of the Mississippi Health Advocacy Program. "This cigarette tax increase is an overdue investment that will lead to less smoking by our children and a healthier state."

House Bill 364 will also generate for the state treasury about $25 million through June and $106 million in the following 12 months to help fund state government and preserve discounts on the price of car tags.

Mississippi is struggling this year with an estimated revenue shortfall of $400 million that''s predicted to be as bad in the next budget year starting in July.

Generating additional revenue was the key to getting the state Legislature to increase what had been the country''s third-lowest state cigarette tax.

"It''s going to do some good things. It''s going to raise some very-needed revenues," said House Ways and Means Chairman Percy Watson, D-Hattiesburg, the bill''s chief sponsor.

"I personally don''t like tax increases, but it''s a good bill because it should keep people from smoking and it''s giving money back to the taxpayers in the form of car-tag reductions," said Senate Finance Chairman Dean Kirby, R-Pearl, who shepherded the cigarette tax bill through the Senate.

In passing the tax increase, the Legislature also included provisions to send about $27 million of its resulting revenue to the state''s car-tag reduction fund. This provides discounts to automobile owners on their car tags and reimburses counties for the revenue loss. A decline in auto sales had forced the state Tax Commission cut back on the reimbursements and shrink the discount.

That''s what compelled many legislators to vote for the cigarette tax increase.

"We''ve had more calls and e-mails on car tags than anything else," Kirby said.

"I am gratified that car-tag relief is coming to Mississippians during these tough economic times, and we will continue to work together to stabilize the price of car tags," said Republican Lt. Gov. Phil Bryant, who presides over the Senate.

Mississippi is the latest state to raise the cigarette tax this year. Arkansas and Kentucky have already increased their rates, and cigarette tax increases were pending in at least 25 states, according to an April 27 report issued by the National Conference of State Legislatures.

Barbour -- a former Washington lobbyist for the tobacco industry -- vetoed two bills in 2006 that would''ve increased the cigarette tax and decreased the 7 percent grocery tax. However, he agreed last year to accept a tax increase of 24 cents a pack for premium cigarettes and 43 cents on less expensive cigarettes produced by companies not participating in the state''s 1997 settlement of a lawsuit against the tobacco industry.

After being stalemated in disagreement since January on how much the increase should be, the House, Senate and governor agreed last week on 50-cent hike for all cigarettes.

However, they remain deadlocked on an overall $19 billion budget for funding state government in the fiscal year that starts in July.

The Democratic-dominated House of Representative wants to spend more, but the Republican-controlled Senate allied with Barbour wants to spend less.

"The House has a sound budget. It''s just not the one Gov. Barbour crafted and is supported by the Senate," said House Appropriations Chairman Johnny Stringer, D-Montrose. "We remain ready to work in good faith confident that right will prevail."

The Legislature last Friday agreed to recess until May 2 to give negotiators more time to reach a budget deal. House-Senate bargainers are meeting today.

Reader Comments

Paul commented at 5/16/2009 11:10:00 AM:

Increase the tax .68 cents? The govt provides for the ability to sell cigarettes and then acts like it's bad and starts taxing it like crazy. Let's know what's right and be confident in it. Just because the govt decides something doesn't mean it's automatically right.

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